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Old 12-15-2015, 12:02 PM   #141
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kind of silly it increases expenses every year but social security and pensions never get a cola . it makes no sense
I'm no expert on this tool. I just dabble with it from time to time. But I think it's intended for everything to be viewed in today's dollars. My Private Client adviser always wants me to look at it that view. My mind only works in nominal dollars.

In any case, on the results page, when you choose 'Future Dollars', it does appear to inflate pensions and SS. Likewise, when you select 'Today's Dollars', expenses appear to NOT be inflated. Problem is, we have two pensions... one COLA, one not. The 'Future Dollars' option inflates both, which is clearly wrong. So there needs to be a place to specify.

However, I just discovered a workaround, which is to set up the non-COLA pension as a "Fixed Income Annuity." When I do that, future payments are not inflated under the 'Future Dollars' results view.
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Old 12-15-2015, 02:07 PM   #142
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funny i saw the reverse . when i hit future dollars on my wifes pension each year it showed the pension worth less . then i got out of the calculator for a few hours . when i went back in it showed the pension inflation adjusting
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Old 12-15-2015, 02:12 PM   #143
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kind of silly it increases expenses every year but social security and pensions never get a cola . it makes no sense
I agree Mathjak, regarding the lack of cola for other income streams. Social Security seems to be the only future income stream receiving a cola. You can also get cola if you enter the income stream as "Govt pension" when you setup the item. I have spousal SS benefit and RIP is inflating it as well as my DW's stream. Perhaps that is a workaround? You do have to pick the Future Dollar tab at top of page BEFORE you go to the cash flow schedule to see the inflation value under the income tab.
I have rental property and had previously entered in the old RIP the income to be cola, but that function seems to be gone.
Cobra is correct regarding "use Future Dollars" function only adjusting initial values to only inception date. I am pretty sure this is a change from the old RIP as well since my rentals previously would receive cola when adjustment if I selected that option.
I have pinged my Fido rep about what happened to the cola option for other income.
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Old 12-15-2015, 02:22 PM   #144
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i have it inflation adjusting my wifes pension and our social security now . but i can't get it to do the spousal benefit adders . i can only seem to enter them non adjuting . .
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Old 12-15-2015, 02:28 PM   #145
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nwsteve, it sounds like mathjak and I both have pensions and SS inflating properly in the future dollar view. I have rental income also. I just checked and it is inflating also. My only problem was a non-COLA pension that I had to enter as a "fixed income annuity" to prevent inflation in the future dollar view. I agree it would be preferable to have a COLA/non-COLA switch for each income stream.
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Old 12-15-2015, 03:33 PM   #146
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i used pension for entering the spousal benefits as they kick in .

we met with our fidelity team yesterday and got to see their new social security optimizer which is for in house only .

it is able to do some pretty wild calculations and instant comparisons to come up with the biggest bang for the buck .

so it utilizes an early benefit that gets stopped after a few years and restarted again at 70 . it has me filing restricted application and delaying until 70 and then when i am 70 it has my wife getting a nice adder to her benefit off my record .


so it had a lot of money coming and going at different times so you can't just enter it as a ss benefit .

th pension entry let me enter it so it inflation adjusted
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Old 12-16-2015, 06:02 PM   #147
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Just got the following clarification back from my Fidelity Rep on mechanics to make COLA work on income stream.
"Great question. In order to have a COLA reflected in the RIP tool, you'll need to select the "adjust to future dollars" box. Then once you run the analysis, you need to make sure your view is in "future dollars" instead of "today's dollars". If you leave it in today's dollars, it unwinds the cola and strips away the 2.5% inflation rate because you're discounting every year to today. Had you not selected adjust to future dollars, the number would actually decrease every year when in the "today's dollars" view because it would discount for inflation every year. The fact that it's flat means it is adjusting for inflation. You need to be looking at the future dollars view however to see the numbers increase annually. Note, there is also a box now for indicating if income is taxable which most annuity and pension it will be.


Note you have to set up income stream and check future dollars box AND be sure to check future dollar options for display to see the inflated amounts.
I re-entered my rental income as a "recurring income" in the type menu (drop down) and selected future dollar option. Did not check the tax box since most of funds are actually depreciation so not taxable.
Results show up under "other income" and are inflated at 2.5% rate which is current Fido assumption for income.
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Old 12-17-2015, 03:23 AM   #148
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I realized that too when playing around. What initially made it confusing was in today's dollars they had expenses rising but discounting inflation in everything else including ss which everyone knows has to be cola adjusted.

Using todays dollars really skews things when they have colas .
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Old 12-18-2015, 03:53 AM   #149
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Interesting thing happened with my analysis the other day. I had a birthday and turned 52. I have the planning set to live to 94. I have expenses detailed in the expense section worksheet.....included everything I have on my personal worksheet. Since the new tool came out, I was getting ~106 on the retirement preparedness measure scale with ~$800k left over with the under performing market. On my birthday, the numbers jumped to 116 on the RPM and ~$1,600k left over. I'm telling the tool I have one more year to work. I didn't drill in yet to see what is happening....it's strange that it would jump this much with a 40 year planning horizon.
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Old 12-18-2015, 03:58 AM   #150
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i am not thrilled with the fact it anticipates a drop in assets of 10-15% right at the first year .

it knocks 300k off our january balance and starts all calculations from that point
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Old 12-18-2015, 01:59 PM   #151
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i am not thrilled with the fact it anticipates a drop in assets of 10-15% right at the first year .

it knocks 300k off our january balance and starts all calculations from that point
I get a similar result with my numbers. In my first year of retirement the model hair cuts my asset balance by about 9%. My current allocation is 55/35/10 equity/bonds/cash.
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Old 12-18-2015, 02:05 PM   #152
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If the market continues its last two day decline for the next ten trading days the tool's portfolio prediction will be accurate.
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Old 12-18-2015, 02:47 PM   #153
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you think they knew ? ha ha ha ha
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Old 12-19-2015, 02:01 PM   #154
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some interesting things i learned about the planner .

inflation adjusting is driven by the type of expenses.

general goods and services are currently at 2.50% , healthcare at 7 % , fixed rate mortgages are zero % . long term care costs 5.505
Where did you see this explained? I looked for it and couldn't find it.

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I like the idea of estimating effective tax rates by running tax calculations for future set of years. I'd have to do it five times, though, if I wanted to do it right because DW and I are 2 years apart. Both <65, One >65, Both >65, One >70, Both>70. Those ages, of course, correspond to going on Medicare, Social Security, and RMD's.

BTW, You should not have to re-purchase ESPlanner unless it was a real old version. I'd just call them and tell them what happened...I'd bet they'd give you a fresh copy.
Yes, that's what I did, based on my situation: ran tax calculations for 62-65, 65 (to reflect large capital gains that year), 66-70, and 70-95. I have a much higher degree of confidence using tax software than using i-orp, as has been suggested. From the tax software results, I decided on the strategy I outlined above.

Thanks for the heads up regarding calling to replace my old version ESPlanner--I'll do that!
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Old 12-19-2015, 02:08 PM   #155
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it is all in the methodoloy pdf

"7. HEALTH CARE INFLATION ASSUMPTIONS
The tool makes the following inflation assumptions and does not
allow you to change these inflation rates.
U  Health Care Costs: The default inflation rate of health care costs
is 7%. This figure is based on a study by the Centers for Medicare
& Medicaid Services (CMS) (an agency of the U.S. Department of
Health and Human Services) estimating growth in health care
costs between 2001 and 2011.
U  Long-Term-Care Costs: The default inflation rate of long-termcare
costs is 5.5% modeled in the what-if scenarios. This figure
is based on a study by the Centers for Medicare & Medicaid
Services (an agency of the U.S. Department of Health and Human
Services) estimating growth in long-term-care costs between
2001 and 2011.
U  Long-Term-Care Insurance Premiums: The default inflation rate
of long-term-care insurance premiums entered in the Budget
Worksheet is 0%. This figure is based on the assumption that
your insurance premiums are fixed and level


http://personal.fidelity.com/plannin...ethodology.pdf
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Old 12-20-2015, 10:57 AM   #156
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Thanks, I don't know how I missed that. Based on their assumptions, I'm probably overestimating health care costs. Oh well, more "padding".
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Old 12-20-2015, 11:08 AM   #157
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the way these markets have been anything that pads things is a plus .
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Old 12-20-2015, 05:02 PM   #158
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the way these markets have been anything that pads things is a plus .
I'm still getting numbers that work with quite a bit of additional padding. I would rather error on the side of caution.
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Old 12-21-2015, 03:22 AM   #159
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yep , i always pictured myself as being the poster child fo the year the 4% swr failed ha ha ha . from the moment i retired in august we have been in a slide .
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Old 12-21-2015, 06:55 AM   #160
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yep , i always pictured myself as being the poster child fo the year the 4% swr failed ha ha ha . from the moment i retired in august we have been in a slide .
Nothing like a 5% slide in asset values in your last few months of work to test your resolve to ER. No more OMYs!
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